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Tag: Pacto por Mexico

Last week Mexico’s Congress approved a bill to end a seven-decade long state oil monopoly. In coming years foreign companies could invest as much as $20 billion a year in Mexico’s oil sector, thanks to new rules that will allow production sharing.

Although the energy reform bill, spearheaded by Mexico’s President Enrique Peña Nieto during his first year in office, has been vociferously opposed by Mexico’s left, the bill has the backing of Peña’s centrist PRI party as well as the right-of-center party of former President Felipe Calderon. Together the PRI and the PAN had enough votes to push the bill through Congress, where it was approved 353-134.

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Last week’s approval of reforms for the pivotal oil company Pemex caps a year of major reforms that could transform Mexico – and perhaps change the immigration debate in the US.

If an award could be given in 2013 for Country of the Year, Mexico might deserve it. No other country has done more this past year to put reforms in place to transform a nation – and with startling democratic consensus. The latest reform, approved Thursday by elected lawmakers, will allow foreign and private investment in the oil sector for the first time in more than 70 years. The move upends a notion of Mexican patriotism that stated the national identity rests on government monopoly of the petroleum industry.

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IN A “Three Stooges” episode, a bungled attempt to find uranium ends with Joe merrily sitting on top of a gushing oil well shouting “Oil’s well that ends well.” President Enrique Peña Nieto must be feeling the same way.

Some of the reforms he promised have been clumsier than expected, and the economy has almost stalled in his first year in office. But after an all-night session featuring rowdy protests by the left, on December 11th the Senate approved an epoch-making constitutional reform of energy that went far beyond initial expectations. If the bill passes the lower house, as expected, Mexico will for the first time in 75 years give up an oil monopoly that many of its people see as a national heirloom. Eventually it could bring a wave of much-needed private investment into oil and gas.

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It has been 20 years since Mexico signed the North American Free Trade Agreement, 13 years since the end of one-party presidential rule, and one year since Enrique Peña Nieto began his presidency promising to modernise the country. The first two were decisive moments for Latin America’s second-biggest economy. They also proved to be false dawns.

Shortly after Nafta came into effect, Mexico suffered the crushing devaluation of the peso – the Tequila crisis – dashing hopes of imminent prosperity. As for democracy, fewer Mexicans today believe it is the best form of government than in 2000. Will the “Mexican moment” of Mr Peña Nieto’s government prove a similar disappointment?

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The great controversy playing out over oil reform this month in Mexico will be central to Mexico’s economic future. Can declining oil production be turned around in order to support an expanding industrial economy rivaling the BRICs and become a global manufacturing hub? This oil reform is so important for Mexico that it is the number one plank in President Enrique Pena Nieto’s “Pact for Mexico” modernization program.

The outcome also matters a lot to the United States, both as a top trading partner and in terms of whether economic growth in Mexico will reduce illegal immigration and pressure on the border between the two countries.

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Mexico’s Senate has passed the most dramatic political reform attempt in decades that would allow re-election of federal legislators, create new election oversight and make the Attorney General’s office independent from the executive.

The Senate approved the overall reform late Tuesday, but continued to debate certain details early Wednesday. The reform measure still has to be approved by the lower House.